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Meiji blames heat wave for chocolate slump

By Oliver Nieburg+

14-Nov-2012

Japan's summer heat wave killed 26, according to reports
Japan's summer heat wave killed 26, according to reports

Japan’s second largest confectioner Meiji pointed the finger at hot weather conditions for chocolate sales declines in its half year results.

“Meiji Almond Chocolate, which reached its 50th Anniversary, sold well, “said Meijii in its financial release yesterday.

“However, as a result of the impact of the lingering summer heat wave, overall chocolate sales posted a year-on-year decline,” it continued.

Twenty-six people died of heatstroke in Japan as temperatures reached over 100F (37°C) in the summer months, according to reports.

Confectionery performance

Meiji’s overall sales for the first six months of the fiscal year ending  on 31 March 2013 grew 2.4% to JPY 561bn (US $7bn), while operating income climbed 35.5% to JPY 10bn ($125m).

However the company’s confectionery segment, its largest business area after dairy, posted a sharp 50.7% drop in operating income.

Meiji clawed back confectionery sales in the second quarter (Q2), but if struggle to shift its chocolate, gum and candy products in Q1 after the Great Japanese Earthquake devastated the domestic economy.

Gum ‘market slump’

It also reported that chewing gum brands such its xylitol gum Xylish, registered a year-on-year drop amid a “market slump”.

Other gum makers have also reported declining gum sales. Mondelez CEO Irene Rosenfeld recently called gum the “problem child” for the company as it sales for its gum category that includes the Trident brand posted consecutive declines.

Meiji has forecast that full year operating income for its confectionery segment will rise 1.8% to JPY 5.2bn ($65 m).

The company will need to record JPY 4.6bn ($58m) in profits in the next two quarters to achieve this estimate.

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